RUBY:

From Schwartz Media, I’m Ruby Jones, this is 7am.

This is a story about the Chinese government's Belt and Road Initiative. It's also a story about a fiberglass replica of Uluru proposed for the Gold Coast.

It's about a tactic China is using - courting lower levels of government, because the federal government refuses to sign up to its controversial infrastructure scheme.

Today - Senior Reporter at The Saturday Paper, Rick Morton, on what the initiative might mean for Australia, and what China might want in return.

Archival tape -- reporter:

China’s Belt and Road initiative is the most expensive infrastructure project in history…

Archival tape -- reporter:

Nearly 70 counties are involved in what’s known as the “one belt one road initiative”, a massive infrastructure project worth almost a trillion dollars.

Archival tape -- reporter:

Chinese companies are building roads, pipelines and railroads around the world, but the initiative is also building China’s influence.

Archival tape -- reporter:

China’s plan to spread soft power around the world by building roads, railways and bridges. It might not sound like a big deal but the implications are huge.

RUBY:

Rick, first off, what is the Belt and Road initiative?

RICK:

This is an infrastructure development project designed to revive the glory of China's Silk Road, especially in developing countries. It's one of China's, or President Xi Jinping’s, easy pickings. Key strategic initiatives. And it's essentially a bunch of economic and infrastructure corridors that link all of these countries by land and by sea. And it is one of three key pillars to a powerful and influential China future.

RUBY:

And how much is it worth?

RICK:

It's worth US one trillion dollars.

But you know, the terms of most of these agreements are vague when it comes to belt and road initiatives where countries can sign one on one with China. It’s a lot of motherhood statements about cooperation and peaceful ties.

RUBY:

So Rick, this is a scheme that China has been keen for Australia to sign on to.

RICK:

Oh, absolutely. In fact, you know, by the start of 2017, China was increasingly desperate to get Australia to sign onto the initiative. But Malcolm Turnbull, the then prime minister, was not having a bar of it.

I spoke to one government source at the time who said there was so much pressure for Australia to sign and announce during Premier Li Keqiang's visit to Australia at the start of 2017.

Archival tape -- reporter:

This is his first overseas visit in 2017 and also his first visit to Australia as Premier, accompanying him…

RICK:

But that didn't happen, and it was mostly because Malcolm Turnbull didn't trust the project. You know, the National Security Committee of Turnbull's cabinet had twice debated the merits of signing up to the BRI. And they twice decided that they could find no real benefit beyond know existing trade relations that were already there. Indeed, they really couldn't find any detail at all. But, you know, Thein, a firm no to the nation's largest trading partner was quite tricky. So they didn't shut the door entirely.

Archival tape -- unknown:

We’re here in the media centre of the BRI forum where…

RICK:

In fact, to keep an open mind. They said Trade Minister Stephen Ciobo to a one belt, one road investment forum in Beijing in May 2017.

Archival tape -- reporter:

Xi Jinping, the Chinese president, will welcome more than two dozen leaders who are attending of the 65 countries…

RUBY:

Okay. And what happened after that meeting in Beijing?

RICK:

Well, you know, not a lot, except things did start to get a little bit weird. You know, a government source told me that they, you know, their department started getting calls about a theme park on the Gold Coast.

RUBY:

Uhh, what?

RICK:

Yeah. It's not something that DFAT usually gets calls about. You know, it's not SeaWorld or Dreamworld. But, you know, in pretty colorful language, this source told me that they had no idea what the calls were about.

The Department of Foreign Affairs and Trade had no idea either. They were just entirely blindsided.

Archival tape -- reporter:

The Gold Coast is set for another theme park with a land of theatre, music and dance to be created at Nerang between the river and train station.

RICK:

And what had happened was that China's Ministry of Culture had listed this 400 million dollar proposed Gold Coast theme park as a key cultural trade and investment project under the BRI.

Archival tape -- reporter:

The Australian legendary Kingdom Park near Metricon Stadium will be worth up to eight hundred million dollars and will come to life under plans by Chinese developers, Song Cheng Performance Development.

RICK:

Now the theme park was going to be called Australian Legends World, you know, and in the original designs it was going to be a giant fiberglass replica of Uluru. And another of Captain Cook's Endeavor.

Archival tape -- reporter:

The project will feature an Aboriginal cultural village and a wild Australia stage show, more details set to be released...

RICK:

Although these were later dumped. And you can probably imagine why.

The park was to be developed by Chinese theme park giant Song Cheng. Although, you know, as of last year, they were still awaiting to go to the city of Gold Coast Planning Committee for approval because there was some other consideration about entrances and exits from the park with a proposed new road that was being built on the Gold Coast. But the point was that there was no formal agreement covering this park.

RUBY:

Right. And so was this or is this theme park part of the Belt and Road initiative?

RICK:

Maybe, maybe not. The way it was put to me by my sources that it was almost like China just wanted to slap the BRI sticker or label on any project it could. You know, this was a private investment from a Chinese owned company, not a state corporation, but just the Chinese investment company. And it was an investment that would have happened on the Gold Coast anyway. But China obviously wanted to claim it as a BRI project because it made the whole program look more powerful and more influential. So as a general rule, doing this doesn't give them any power in the normal sense that you and I would understand it. It doesn't really mean anything, but it does give them a signal that they can put out into the rest of the world.

RUBY:

And what is that signal?

RICK:

That China is culturally, economically and politically powerful.

In the 1960's, China's then defense minister, Lin Piao, articulated a strategic shift in the nation's foreign policy. You know, he saw the world figuratively divided between city and country. And while, you know, most people lived in the country, they were not politically powerful and they were not often listened to. And that meant they were more open to influence. So in more modern times, this strategy has transformed again. In short, if you can't get the leaders of a nation onside, go for the lower levels of government.

The federal government has repeatedly knocked back China's belt and road expansions. And, you know, that's why the Chinese government is dealing with the Gold Coast City Council, for one. And just as a planning exercise. But, you know. That's not enough for them. And they've got their eyes set on a bigger target and something that has a lot more sway certainly in Australia, and that's with the Andrews Labor government in Victoria.

You know, China was searching for the highest level of government that it could get in Australia to sign an agreement. And they got Victoria.

RUBY:

We'll be back after this.

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RUBY:

Rick, we're talking about China's Belt and Road initiative. Victoria has signed onto the scheme. Can you tell me about that?

RICK:

The terms of the agreement, very vague. It's a four page document and it's very nebulous. You know, it talks about working together to promote connectivity, a policy, infrastructure, trade, finance, and people mentioned new opportunities and new momentum to achieve common development. And It's been controversial.

Archival tape -- reporter:

The Victorian Government’s links to Beijing are being questioned by the federal government…

Archival tape -- unknown:

Victoria needs to explain why it’s the only state in the country that’s entered this relationship...

RICK:

Premier Daniel Andrews has endured sustained criticism for signing the Memorandum of Understanding with China in October 2018, including from the federal government and the United States, Secretary of State Mike Pompeo.

Archival tape -- Pompeo:

Look, every nation has its own sovereign right to make decisions for itself. And I suppose Victoria has some rights that it can undertake. But every citizen of Australia should know that every one of those Belt and Road projects needs to be looked at incredibly closely...

RICK:

There are no specific obligations and there is no money. There are no projects listed. It's not a legally binding contract. Any of the parties can cancel it at any time. Which poses the question, of course, what on earth is it for?

RUBY:

And is that a fair question? In Victoria's case, what is it for?

RICK:

Oh, it's a very fair question. And, you know, the Andrews government would say, in fact, they do say, even without specific terms, that the agreement is good for trade. They were frustrated by the way the federal government is trading Chinese relations. And they had fun, too, at the time, historic lows under Malcolm Turnbull's leadership. And they wanted to work directly with China because, you know, China represents such a huge chunk of their own economy.

Archival tape -- Alibaba promotion:

Invest Victoria has been highly supportive of the establishment of Alibaba’s Group’s HQ in Melbourne…

Archival tape -- unknown:

… I think what DiDi adds to Melbourne is more job opportunities, more…

RICK:

So, you know, even before they signed in the past three years, a string of Chinese companies had announced Australia New Zealand headquarters in Victoria, including the tech company Alibaba.

The train manufacturer CRRC, the ride share service DiDi, and the China and Bub's Australia Ltd.

And so you're talking about a 30 billion dollar, two way trade between the countries in 2019. Chinese tourists spent more than any other group in the same period, and international students contributed about four point one seven billion dollars to the state in 2018-19. It's not small bickies, in other words.

A senior Victorian government source put it to me like this, and I'm quoting him now: DFAT have always had this realm to themselves. And when the states want to enter, they're not happy with it. One of the challenges with DFAT is that they are very clear on the foreign affairs element of their portfolio and not that clear on the trade side. And he went on to say that's why we end up playing these parlor games.

RUBY:

And what are the actual concerns with the Belt and Road initiative? What is the federal government worried about?

RICK:

Well, the big concern is always what we broadly call foreign influence, losing control over key infrastructure. But more broadly than that, it's, you know, in foreign policy circles is a concern that BRI is at its worst, a style of debt trap diplomacy that hooks poorer nations on dazzling investments and then leverages their international support when the loans are due.

So you note that China's been doing this in the Pacific. They've gone to Vanuatu and built a brand new port.

Archival tape -- reporter:

Chinese President Xi Jinping has met with Vanuatu’s PM. Xi Jinping said bilateral relations...

RICK:

They're offering a one billion dollar project in the Solomon Islands. In Papua New Guinea there’s talks.

Archival tape -- reporter:

The Chinese leader praised PNG for its stance on the one China policy and called for the expansion of cooperation under the BRI...

RICK:

These are not nations with a lot of money. So it's very easy, perhaps, to get them on board. But what comes later? That's what the foreign policy hawks are worried about, is whether China is using this in an expansionist sense, whether sometime down the track, these facilities will be used by China in a military sense, or whether they'll just get kind of soft diplomacy out of it. And these nations will support China in the UN and in other kind of affairs.

RUBY:

And what about in Victoria? Surely debt trap diplomacy is not a risk here?

RICK:

So I spoke to Victorian government official about this and he point out, well, that's not really an issue for the state, and that's true, although there's no way that the government wouldn't have been briefed about this. Certainly, there's no way that Daniel Andrews wouldn't have had briefings from his own Department of Premier and Cabinet.

And, you know, I spoke to Michael Shoebridge, who is the director of defense strategy and national security at the Australian Strategic Policy Institute. And he basically said BRI is United Front, which is a key part of the Chinese Communist Party. You know, it's in simple terms, a propaganda tactic developed during China's civil war and refined. Since then, President Xi Jingping has called it in speeches in public, his magic weapon. This is the united front. He means.

Archival tape -- President Xi Jinping (translated):

It creates a new platform for international trade and investment and provides new ways for global economic governance…

RICK:

So Shoebridge said that is a mistake to read the BRI as a simple marketing exercise. He says there is a vision of a Sino centric world, in part created by the BRI That is very real. And he says he will eat. You know, he was always surprised to see people either not read Xi's words, President Xi’s words, or to discount what he says. Even when you see follow through on the implementation. So that's where the real concerns, great being here is like what is China actually up to with this thing and did they score an easy win with Victoria?

RUBY:

Mhm, and having reported this story, what do you make of the initiative and Victoria’s engagement with it?

RICK:

So, you know, Daniel Andrews has a lot of pro-Beijing people around him. And in fact, you know, he used to serve in the cabinet of the former premier of Victoria, John Brumby, who is now the president of the Australia China Business Council, who essentially reckons B arrives the best thing since sliced bread. And, you know, there are people in Daniel Andrews, his ministerial office and his electorate office who are very much on board with this as a concept. And, you know, I've talked to people about this as an idea. It's like, you know, in the 2010s back then we were dealing with the Asian century. We were talking about unprecedented gains in the relationship between China and Australia. And things were looking on the up, right? We had all our resources going over there. We wanted to make them the focus of our foreign policy. The US were pivoting to Asia as well in the Pacific again for the first time since World War Two. And then things started a little bit choppy and China started demonstrating some pretty awful behavior, to be quite honest, in the South China Sea with the Spratly Islands.

And you've got human rights abuses on the record with some of the Muslim populations in China and certainly some belligerent behavior on the international stage. So some of the hawks I was talking to were saying that it might have been a good idea to find BRI back then. It's probably time to reassess whether it was the right thing to do now. And certainly, some of those early assumptions should be changed.

We are not necessarily dealing with a straightforward economic infrastructure development fund. It's a lot more than that. And I think it would be naive to assume that there won't be favors asked of us or later on. You know, it's classic China in the sense that it has wedged a state government, which is the second most powerful level of government in Australia against the national leadership. So that is a strategic move by China. And they've succeeded on that front.

RUBY:

Rick, thanks so much for your time today.

RICK:

Thanks, Ruby.

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RUBY:

Also in the news -

George Floyd has been buried in his hometown of Houston, Texas, with the city’s mayor announcing at his funeral that he would ban police from using chokeholds.

At least 10 other cities and municipalities in the United States are starting to ban or have banned the use of chokeholds in policing.

In Washington, D.C. police are now also banned from using chemicals such as tear gas and pepper spray on protestors.

Meanwhile, in Minneapolis, where George Floyd was killed, city officials have vowed to dismantle the police department and start over.

I’m Ruby Jones, this is 7am, see you tomorrow.